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Entries by Donna Niesen, Mike North

How Wayfair v. South Dakota Changed M&A Due Diligence

Posted 5:50 PM by
The U.S. Supreme Court recently shifted one of the foundational principles that determine how a state can tax business transactions within its boundaries. This change will have a cascading effect in the deal space. In South Dakota v. Wayfair (Wayfair), the court held that an out-of-state company could establish nexus by exceeding certain thresholds of dollar volume or number of sales into the state, a standard known as “economic nexus.” Moving forward, potential buyers and sellers need to understand the new complexities the Wayfair decision has added to the due diligence process. It is more important than ever to have deep knowledge of what the target business sells, where it has established nexus, and whether or not it has complied with obligations in those states.
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